SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2003
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OF 15(d) OF THE EXCHANGE ACT OF
1934
From the transition period from ___________ to ____________.
Commission File Number 0-29935
20/20 NETWORKS, INC.
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(Exact name of small business issuer as specified in its charter)
Nevada 33-0677140
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
20700 Ventura Blvd., #227, Woodland Hills, California 91364
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(Address of principal executive offices)
(818) 227-9494
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(Issuer's telephone number)
N/A
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(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) filed all reports
required to be filed by Section 13 or 15(d) of the Exchange Act during the past
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days:
Yes : [X] No: [ ]
As of August 14, 2003 there were 11,396,200 shares of Common Stock of the issuer
outstanding.
TABLE OF CONTENTS
PART I FINANCIAL STATEMENTS
Item 1 Financial Statements 3
Item 2 Management's Discussion and Analysis or Plan of Operation 7
Item 3 Controls and Procedures 8
PART II OTHER INFORMATION
Item 1 Legal Proceedings 8
Item 2 Changes in Securities 8
Item 3 Default upon Senior Securities 8
Item 4 Submission of Matters to a Vote of Security Holders 8
Item 5 Other Information 8
Item 6 Exhibits and Reports on Form 8-K 8
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
20/20 NETWORKS, INC.
BALANCE SHEET
June 30, December 31,
2003 2002
----------- -----------
(Unaudited)
Assets $ -- $ --
----------- -----------
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 124,089 $ 103,419
Accounts payable - related party 22,229 22,229
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Total current liabilities 146,318 125,648
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Stockholders' deficit:
Common stock, $.001 par value, 100,000,000 shares authorized,
1,710,991 and 430,991 shares issued and outstanding: 1,711 431
Additional paid-in capital 875,783 749,063
Deficit accumulated during the development stage (1,023,812) (875,142)
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Total stockholders' deficit (146,318) (125,648)
----------- -----------
$ -- $ --
=========== ===========
20/20 NETWORKS, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2003 2002 2003 2002
--------- --------- --------- ---------
Cost and Expenses:
General and administrative $ 138,090 $ 13,832 $ 148,670 $ 15,967
--------- --------- --------- ---------
Net loss $(138,090) $ (13,832) $(148,670) $ (15,967)
========= ========= ========= =========
Basic and diluted loss per common share $ (0.24) $ (0.03) $ (0.30) $ (0.04)
========= ========= ========= =========
Weighted average shares outstanding 571,651 430,991 501,710 430,991
========= ========= ========= =========
20/20 NETWORKS, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
Six months ended
June 30,
2003 2002
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Cash flows from operating activities:
Net loss $(148,670) $ (15,967)
Adjustments to reconcile net income to net cash
used in operating activities:
Common stock for services 128,000 --
Changes in operating assets and liabilities
Accounts payable 20,670 15,967
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Net cash provided by (used in) operating activities -- --
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Net increase (decrease) in cash and cash equivalents -- --
Cash and cash equivalents at beginning of period -- --
--------- ---------
Cash and cash equivalents at end of period $ -- $ --
========= =========
Cash paid for:
Taxes $ -- $ --
Interest $ -- $ --
20/20 WEB DESIGN, INC.
NOTES TO INTERIM FINANCIAL STATEMENTS
June 30, 2003
Note 1: Presentation
The balance sheet of 20/20 as of June 30, 2003, the related statements of
operations for the three and six months ended June 30, 2003 and 2002 and the
statements of cash flows for the six months ended June 30, 2003 and 2002
included in the financial statements have been prepared by 20/20 without audit.
In the opinion of management, the accompanying condensed financial statements
include all adjustments (consisting of normal, recurring adjustments) necessary
to summarize fairly 20/20's financial position and results of operations. The
results of operations for the three and six months ended June 30, 2003 are not
necessarily indicative of the results of operations for the full year or any
other interim period. The information included in this Form 10-QSB should be
read in conjunction with Management's Discussion and Analysis and Financial
Statements and notes thereto included in 20/20's December 31, 2002 Form 10-KSB.
NOTE 2 - COMMON STOCK
During the six months ending June 30, 2003, 20/20 issued 1,280,000 shares of
common stock for services valued at $128,000.
NOTE 3 - AGREEMENT AND PLAN OF REORGANIZATION
In June 2003, 20/20 entered into an agreement to acquire E-Z Arch, LLC
("EZ-Arch"). E-Z Arch will exchange 100% of its common stock and cash for
majority control of 20/20. The transaction will be accounted for as a reverse
merger. As of August 14, 2003 the transaction had not closed.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
This report contains forward looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended and Section 21E of the Securities
Exchange Act of 1934, as amended. 20/20's actual results could differ materially
from those set forth on the forward looking statements as a result of the risks
set forth in 20/20's filings with the Securities and Exchange Commission,
general economic conditions, and changes in the assumptions used in making such
forward looking statements.
GENERAL
20/20 Networks, Inc. formerly known as 20/20 Web Design, Inc. (the "Company")
was incorporated on August 31, 1995 as "Visioneering Corporation" under the laws
of the State of Nevada, to engage in any lawful corporate undertaking,
including, but not limited to, selected mergers and acquisitions. The Company
subsequently changed its name to "Asiamerica Energy Group, Inc." on January 12,
1996 when it entered into an agreement to acquire an oil and gas company. No
stock was issued and no assets were acquired as this acquisition was not
consummated.
The Company then changed its name to "Care Financial Group, Inc." on April 29,
1996. At that time, the Company had agreed to form a wholly owned subsidiary,
Care Concepts, Inc., a Nevada corporation ("Care Concepts"). The Company issued
3,700,000 shares of its common stock to Care Concepts which shares were valued
at $25,000. Care Concepts was in the business of designing and building
specialized motor vehicles for physically handicapped drivers and passengers.
Ultimately, this acquisition did not succeed and the Company paid Care Concepts
$80,000 to terminate the agreement between Care Concepts and the Company while
the shareholders of Care Concepts retained their shares of the Company's common
stock. The Company subsequently approved a 250-to-1 reverse stock split after
this transaction was terminated.
On May 15, 1997, the Company changed its name to "Trump Oil Corporation"
("Trump"). Trump proposed to merge with Fenway Resources Ltd., a Canadian
company involved in natural resource development which wanted to develop and
construct a cement manufacturing facility in the Philippines. This proposed
merger was never consummated and no shares were issued pursuant to this
agreement.
None of the proposed business activities for which the Company's name was
changed produced any revenues or created any appreciable business activities for
the Company. On March 10, 1999, the Company entered into a letter of intent with
20/20 Web Design, Inc. ("20/20 Web"), a Colorado corporation, a wholly owned
subsidiary of Multi-Source Capital, Ltd. ("MSC"), also a Colorado corporation.
The Company entered into an Agreement and Plan of Reorganization and completed
its acquisition of 20/20 Web, with the Company changing its name as a result. As
a result of the merger, MSC became the owner of 80% of the issued and
outstanding shares of the Company. The Company recorded the 8,620,000 shares of
stock issued to MSC at par value for a total of $8,620. MSC was later acquired
by TeleMall Communications, Inc. ("TeleMall"), a publicly traded company which
subsequently changed its name to Crown Partners, Inc. ("Crown").
In 1999, the Company continued the business of the Colorado corporation it
acquired and continued to design and maintain web sites for small, private
companies. The Company's clients included a jewelry store, a gift basket company
and certain other small companies. The revenues received from these operations
were minimal.
In December, 1999, the Company formed a wholly owned subsidiary, Stein's Cake
Box ("Cake Box"), a Nevada corporation. The Company entered into a letter of
intent with a bakery operation in Lewisville, Texas controlled by the Company's
president, Randy Sutton. The Company lent $195,000 to Cake Box in connection
with the letter of intent. Cake Box used the $195,000 to pay some of the
construction costs of a proposed bakery operation estimated to ultimately cost a
total of $750,000. The proposed construction project was to expand an existing
bakery operation located at the same location, College Connection, Inc. dba
Stein's Bakery (the "Bakery"), also run by Mr. Sutton. In late February, 2000,
the Company and the Bakery mutually agreed to cancel their letter of intent
concerning Cake Box, although the Bakery remained liable to repay the $195,000
it acquired from Cake Box. Due to the subsequent filing of a petition under the
U.S. Bankruptcy Code, the Company was unable to collect this debt. In February
2001, the Company entered into a letter of intent with BentleyTel.com, Inc.
("BentleyTel"), a Nevada corporation, to acquire BentleyTel in a statutory
merger. The terms of the proposed acquisition require, among
other things, that the Company to increase its authorized capital from twenty
five million shares of common stock to one hundred million shares, approve a
forward-split of one-for-four and change its name to "BentleyTel, Inc." The
transaction was not completed and the Company changed its name back to 20/20 Web
Design, Inc.
During the quarter ended March 31, 2003, the Company approved a 100-to-1 reverse
split and a change of name to "20/20 Networks, Inc.".
As part of its acquisition of E-Z Arch in June, 2003, the Company issued a
total of 10,525,000 shares of its common stock. The Company intends to engage in
the telephone business in certain developing countries, beginning with Mexico
and other Latin American countries and is seeking the necessary capital to
pursue this goal.
20/20 presently has no office space.
As of June 30, 2003, 20/20 had no employees.
RESULTS OF OPERATIONS
THREE AND SIX MONTHS ENDED JUNE 30, 2003 COMPARED TO THREE AND SIX MONTHS ENDED
JUNE 30, 2002
There were no revenues or cost of revenues for the three and six months ended
June 30, 2003 and 2002, respectively.
20/20's expenses for the three months ended June 30, 2003 were approximately
$138,090, representing general and administrative expenses, which are primarily
from the issuance of 1,280,000 shares of common stock for services valued at
$128,000 or $0.10 per share. 20/20 recorded a net loss of $138,090 for the three
months ended June 30, 2003. 20/20's expenses for the three six months ended June
30, 2002 were $13,832 representing general and administrative costs. 20/20
recorded a net loss of $13,832 for the three months ended June 30, 2002. The net
loss per share was $0.24 for the three months ended June 30, 2003 compared to a
net loss of $0.03 per share for the three months ended June 30, 2002.
20/20's expenses for the six months ended June 30, 2003 were approximately
$148,670, representing general and administrative expenses which are primarily
from the issuance of 1,280,000 shares of common stock for services valued at
$128,000 or $0.10 per share. 20/20 recorded a net loss of $148,670 for the six
months ended June 30, 2003. 20/20's expenses for the six months ended June 30,
2002 were $15,967 representing general and administrative costs. 20/20 recorded
a net loss of $15,967 for the six months ended June 30, 2002. The net loss per
share was $0.30 for the six months ended June 30, 2003 compared to a net loss of
$0.04 per share for the six months ended June 30, 2002.
As of June 30, 2003 and 2002, 20/20 had assets of less than $100. 20/20's
current liabilities at June 30, 2003 were approximately $146,000 compared to
liabilities of approximately $126,000 for the year ended December 31, 2002. This
difference is primarily attributable to the expenses incurred in filing a
registration statement under the 1934 Act and the associated legal and
accounting expenses incurred as a result as well as legal costs incurred in
connection with the BTC transaction. Shareholders' deficit at June 30, 2003 was
approximately $146,000 compared to total shareholders' deficit of $126,000 for
the year ended December 31, 2002.
20/20 anticipates that until a business combination is completed with an
acquisition candidate, it will not generate revenues and may operate at a loss
after completing a business combination, depending upon the performance of the
acquired business.
20/20 will attempt to carry out its business plan as discussed above. 20/20
cannot predict to what extent its lack of liquidity and capital resources will
hinder its business plan prior to the consummation of a business combination.
LIQUIDITY AND CAPITAL RESOURCES
Since inception, 20/20 has experienced no significant change in liquidity or
capital resources or stockholders equity other than the receipts of proceeds
from offerings of its capital stock. 20/20 received $250,000 from an offering
conducted under Rule 504 of Regulation D in 1999. 20/20 also raised
approximately $158,000 from the issuance of 7,200,000 shares of 20/20's common
stock prior to 1997. In 1997, 20/20 raised an additional $345,000 from the sale
of its common stock. 20/20's balance sheet as of June 30, 2003 reflects limited
assets and limited liabilities. Further, there exist no agreements or
understandings with regard to loan agreements by or with the Officers,
Directors, principals, affiliates or shareholders of 20/20.
20/20 is continuing to search for suitable merger candidates or other businesses
to become involved in so that it can commence operations and generate revenues
to continue paying its bills.
20/20 will attempt to carry out its plan of business and hopes to enter into a
business combination with another entity. 20/20 cannot predict to what extent
its lack of liquidity and capital resources will hinder its business plan prior
to the consummation of a business combination.
NEED FOR ADDITIONAL FINANCING
20/20's existing capital is not sufficient to meet 20/20's cash needs, including
the costs of compliance with the continuing reporting requirements of the
Securities Exchange Act of 1934, as amended. Once a business combination is
completed, 20/20's need for additional financing is likely to increase
substantially.
No commitments to provide additional funds have been made by management or other
stockholders. Accordingly, there can be no assurance that any funds will be
available to 20/20 to allow it to cover its expenses.
20/20 might seek to compensate providers of services by issuing common stock in
lieu of cash.
DESCRIPTION OF PROPERTIES
20/20 presently has no office space.
EMPLOYEES
As of June 30, 2003, 20/20 had no employees.
Inflation
20/20's results of operations have not been affected by inflation and management
does not expect inflation to have a significant effect on its operations in the
future.
ITEM 3. CONTROLS AND PROCEDURES
Based on the evaluation of 20/20's disclosure controls and procedures by Mr.
Charles Smith, both the chief executive officer and chief accounting officer of
20/20, as of a date within 90 days of the filing date of this quarterly report,
such officer has concluded that 20/20's disclosure controls and procedures are
effective in ensuring that information required to be disclosed by 20/20 in the
reports that it files or submits under the Securities and Exchange Act of 1934,
as amended, is recorded, processed, summarized and reported, within the time
period specified by the Securities and Exchange Commission's rules and forms.
There were no significant changes in 20/20's internal controls or in other
factors that could significantly affect these controls subsequent to the date of
their evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.
PART II
Items No. 1, 3, and 4 - Not Applicable.
ITEM 2. CHANGES IN SECURITIES
In June 2003, 20/20 issued 1,280,000 shares of common stock to various
consultants for services rendered. These shares were registered on a Form S-8
Registration Statement.
Item No. 5 - Other Information
None
Item No. 6 - Exhibits and Reports on Form 8-K
(a) A Form 8-K was filed on February 10, 2003.
(b) Exhibits
None
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
20/20 NETWORKS, INC.
By /s/ Edward Gallagher
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Edward Gallagher, President
By: /s/ Charles Smith
--------------------------
Charles Smith, CFO
Date: August 14, 2003
FORM OF CERTIFICATION
PURSUANT TO RULE 13a-14 AND 15d-14
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
CERTIFICATION
I, Edward Gallagher, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of 20/20
NETWORKS, INC.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
(a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days of the filing date of this
quarterly report (the "Evaluation Date"); and
(c) presented in this quarterly report our conclusions about
the effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the audit
committee of the registrant's board of directors (or persons performing the
equivalent functions):
(a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability to
record, process, summarize, and report financial data and have identified for
the registrant's auditors any material weaknesses in internal controls; and
(b) any fraud, whether or not material, that involves
management or other employees who have a significant role in the registrant's
internal controls.
6. The registrant's other certifying officer and I have indicated in
this quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: August 14, 2003 /s/ Edward Gallagher
-----------------------------------
Name: Edward Gallagher
Title: President
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of 20/20 NETWORKS, INC. on Form 10-QSB
for the period ended June 30, 2003 as filed with the Securities and Exchange
Commission on the date hereof (the "Report"), each of the undersigned, in the
capacities and on the dates indicated below, hereby certifies pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that to the best of his knowledge:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operation of 20/20.
/s/ Edward Gallagher
--------------------------------
Edward Gallagher, President
/s/ Charles Smith
--------------------------------
Charles Smith, CFO
Dated: August 14, 2003